141 U.S.

384
12 S.Ct. 1
35 L.Ed. 786

FOWLER et al.
v.
EQUITABLE TRUST CO.
No. 32.

EQUITABLE TRUST CO.

v.
FOWLER et al.
No. 33.
October 26, 1891.
[Syllabus from pages 384-385 intentionally omitted] By deed, bearing
date November 1, 1873, and acknowledged and filed for record February
23, 1874, Edwin S. Fowlerhis wife, Sophie Fowler, uniting with him
conveyed to Jonathan Edwards, in feesimple, certain real estate in the city
of Springfield, Ill., in trust to secure the payment of the principal and
interest of nine bonds, of $1,000 each, executed by Fowler to the
Equitable Trust Company, a Connecticut corporation, and payable,
principal and interest, at its office in the city of New York; the principal,
five years after date, and the interest, semi-annually, at the rate of 7 per
cent. per annum.
The deed recited that the bonds were given to secure a loan of $9,000,
payable five years after date thereof, with interest at 10 per cent. per
annum, of which 7 per cent. per annum was secured by the deed of trust,
and was to be paid as in the bond provided; and the balance, to-wit, 3 per
cent. per annum, was 'discounted,' and paid at the time of the execution of
the deed. In case of default in paying the principal or interest as each
matured, or of failure to keep and perform the covenants of the deed, or
any of them, the trustee was authorized to sell at public auction, after
advertisement, to the highest bidder for cash, and with or without previous
entry upon the premises, the right and equity of redemption of the

grantors, and out of the proceeds of sale to pay the costs, charges, and
expenses of the advertisement, sale, and conveyance, 'including
commissions, such as are, at the time of such sale, allowed by the laws of
Illinois to sheriffs on sale of real estate on execution,' all sums paid by the
trustee for insurance and taxes, with 10 per cent. interest thereon from
time of payment, the principal and the accrued interest remaining unpaid
at the time of sale, and to Fowler any balance remaining.
The present suit was brought October 26, 1882, to foreclose the
defendants' right and equity of redemption, and for a sale of the mortgaged
property to raise such sum as might be due the mortgagee.
Fowler, by his answer, put the plaintiff upon proof of the averments of the
bill, and made defense upon several grounds; But the original answer is
important only as alleging that the loan was usurious, and was
consummated in the manner it was with intent to evade the statutes of
Illinois relating to interest.
The plaintiff filed a general replication; and, subsequently, the defendants,
by leave of the court, amended their answer, stating more fully the
grounds upon which they based the defense of usury. They also alleged
that the contract of loan was and is a New York contract, and that by the
statutes of that state it was usurious, in that the interest contracted to be
received by the plaintiff, having regard to the amount actually advanced
by it, was in excess of 7 per cent. per annum,the rate established by the
laws of New York. Of those statutes they claimed the benefit.
By a decree passed October 20, 1884, the court below found the amount
due from Fowler to be only $2,980.67 on the bonds, and $270.94,
insurance and taxes paid by the plaintiff, with interest thereon; in all,
$3,251.61. At the foot of that decree were these orders:
'And thereupon the complainant entered its motion for a rehearing before a
full bench.
'Whereupon, on said 20th day of October of the year last aforesaid,
[1884,] came the complainant, by its solicitor, and filed in the clerk's
office of said court its motion and petition for a rehearing in this cause,
which motion and petition are as follows,' etc.
Following the above, in the transcript, are the written motion and petition
for rehearing.
On the 8th of June, 1885,the succeeding term,the cause was set for

hearing on the 29th of that month before what is called a full bench. Then
appears an order, under date of June 30, 1885, entered as of October 31,
1884, granting the rehearing asked. To that order the defendants excepted.
By the final decree of January 11, 1887, the sum of $8,150.79 was
adjudged to be due the trust company, of which $7,809.69 was found to be
the sum actually advanced by it to Fowler, and $341.10 was the amount of
insurance and taxes on the property paid by the company, with interest on
each sum, from date of the decree, at the rate of 6 per cent. per annum.
The mortgaged property was ordered to be sold to raise the above
aggregate amount found to be due, with such interest, and the costs of the
suit. From that decree each party has prosecuted an appeal; the defendants
insisting that no decree, for any amount, should have gone against them,
while the plaintiff insists that the decree should have been for a larger
amount.
W. L. Gross, for Equitable Trust Company.
[Argument of Counsel from pages 388-391 intentionally omitted]
R. G. Ingersoll and Wm. Richie, for the Fowlers.
[Argument of Counsel from pages 391-393 intentionally omitted]
Mr. Justice HARLAN, after stating the facts in the foregoing language,
delivered the opinion of the court.

1. The appellant Fowler contends that, as no order was made at the term when
the first decree was entered continuing until the succeeding term the motion
and petition for rehearing, the decree of October 20, 1884, became final, and,
consequently, the order at the June term, 1885 entered as of October 31, 1884,
which granted a rehearing, as well as the decree January 11, 1887, are to be
treated as improvidently made, or as nullities. We do not concur in this view. It
is not disputed that if, in October, 1884, a rehearing was granted, and the clerk
omitted to enter an order to that effect, it would have been within the power of
the court, at the succeeding term, by an order nunc pro tunc to make the record
speak the truth. But as the order granting a rehearing was entered under date of
October 31, 1884, the presumption must be indulged, in support of the action of
a court having jurisdiction of the parties and the subject-matter, nothing to the
contrary affirmatively appearing,that the facts existed which justified its
action; and, therefore, that the court granted the application for a rehearing at
the term at which the first decree was rendered. Stockton v. Bishop, 4 How.

155, 167; Townsend v. Jemison, 7 How. 706, 718. Besides, the exception taken
by the defendants to the proceedings of June 30, 1885, was not, in terms, that
the order, then formally made, was directed to be entered as of October 31,
1884, but that it granted a rehearing. If they intended to deny that the rehearing
had been in fact ordered at the previous term of the court, the point should have
been distinctly made upon the record. sum due to sum person or corporation.
contend that the contract of loan was a New York contract, and void under the
laws of that state; and that neither the debt thus created, nor the mortgage given
to secure the bonds, can be recognized, nor any recovery thereon had, in Illinois
or elsewhere, for principal or interest. This contention rests upon the statute of
New York, in force when the debt was created, providing that all bonds, bills,
notes, assurances, conveyances, and all other contracts or securities whatsoever,
whereupon or whereby there shall be reserved or taken, or secured, or agreed to
be reserved or taken, any greater sum or greater value, for the loan or
forbearance of any money, goods, or things in action, than at the rate of 7 per
cent. per annum, shall be void. 1 Rev. St. N. Y. pt. 2, c. 4, tit. 3, 5; 2 Rev. St.
(Banks & Bros.' 6th Ed.) 1164-1166. The suggestion that by the contract of loan
a rate of interest was reserved in excess of that allowed by the laws of New
York is based upon the ground that, although the bonds in suit call only for 7
per cent. interest, a much larger rate was in fact exacted and secured by the
company, taking into consideration the amount of the loan, and the sum
actually received, under the contract.
2

By the thirteenth section of a statute of Illinois in force on and after February

12, 1857, entitled 'An act to amend the interest laws of this state,' it was
provided: 'Where any contract or loan shall be made in this state, or between
citizens of this state and any other state or country, bearing interest at any rate
which was or shall be lawful according to any law of the state of Illinois, it shall
and may be lawful to make the amount of principal and interest of such contract
or loan payable in any other state or territory of the United States, or in the city
of London, england; and in all such cases such contract or loan shall be deemed
and considered as governed by the laws of the state of Illinois, and shall not be
affected by the laws of the state or country where the same shall be made
payable.' Gross, St. Ill. 1869, p. 371, c. 54, 13.

And by another act, in force on and after February 16, 1857, entitled 'An act for
the encouragement and security of loans of money,' it was provided: 'Sec. 14. It
shall be lawful for any person or corporation borrowing money in this state to
make notes, bonds, bills, drafts, acceptances, mortgages, or other securities, for
the payment of principal or interest at the rates authorized by the laws of this
state, payable at any place where the parties may agree, although the legal rate
of interest in such place may be less than in this state; and such notes, bonds,

bills, drafts, acceptances, mortgages, or other securities shall not be regarded or

held to be usurious; nor shall any securities taken for the same or upon such
loans be invalidated in consequence of the rate of interest of the state, kingdom,
or country where the paper is made payable being less than in this state, nor of
any usury or penal law therein. Sec. 15. No plea of usury nor defense founded
upon an allegation of usury shall be sustained in any court in this state, nor shall
any security be held invalid on an allegation of usury where the rate of interest
reserved, discounted, or taken does not exceed that allowed by the laws of this
state, in consequence of such security being payable in a state, kingdom, or
country where such rate of interest is not allowed. Sec. 16. It shall be lawful for
all parties loaning money in this state to take, reserve, or discount interest upon
any note, bond, bill, draft, acceptance, or other commercial paper, mortgage, or
other security, at any rate authorized by the laws of this state, whether such
paper or securities for principal or interest be payable in this state, or in any
other state, kingdom, or country, without regard to the laws of any other state,
kingdom, or country; and all such notes, bonds, bills, drafts, acceptances, or
other commercial paper, mortgages, or other security shall be held valid in this
state, whether the parties to the same reside in this state or elsewhere.' Gross,
St. 1869, p. 372, c. 54.
4

These statutory provisions were in force at the contract of loan involved in this
case; and, although the above acts of February 12, 1857, and February 16,
1857, were repealed by the act approved March 31, 1874, in force July 1, 1874,
they remained in full force and effect as to rights acquired or causes of action
existing under them, and before the repealing act went into operation. Rev. St.
1874, pp. 1012, 1023, 1046, c. 131, 5, pars. 297, 299, 6. And by the act
approved March 25, 1874, in force July 1, 1874, entitled 'An act to revise the
law in relation to the rate of interest,' this provision of former acts was reenacted and preserved: 'When any bond, bill, draft, acceptance, mortgage, or
other contract shall have been or shall be made in this state, or between citizens
of this state, or a citizen of this state and any other state, territory, or country,
bearing interest at a rate lawful by the laws of this state, may be made payable
in any other state, territory, or country, such contracts shall be governed by the
laws of this state.' Rev. St. Ill. 1874, p. 615, c. 74, 8.

The contract of loan in question having been made between a citizen of Illinois
and a corporation of another state, and the bonds having been executed in
Illinois, and secured by mortgage upon real estate there situated, the defense of
usury, in a court of the United States sitting in and administering the laws of
Illinois, cannot be sustained upon the ground simply that the rate of interest
exacted or reserved was in excess of that allowed by the law of the state in
which the bonds are made payable.

3. We come now to consider whether, according to the law of Illinois, there was
usury in this loan.

The statutes of Illinois in force when this loan was made fixed 6 per cent. per
annum as the rate of interest upon the loan or forbearance of any money, goods,
or things in action, with liberty to parties to stipulate or agree that 10 per cent.
per annum be taken and paid; but it was provided that, if any person or
corporation in that state should contract to receive a greater rate of interest or
discount than 10 per cent. upon any contract, verbal or written, such person or
corporation should forfeit the whole of the interest contracted to be received,
and should be entitled only to recover the principal sum due to such person or
corporation. Gross, St. Ill. 1869, (2d Ed.) pp. 370, 371 c. 54; Rev. St. Ill. 1874,
p. 614, c. 74.

The contract was for a loan to Fowler of $9,000 at 10 per cent. interest per
annum. Seven per cent. of the interest was evidenced by conpons attached to
the nine bonds of $1,000 each, and were secured with the bonds by the deed of
trust. The remaining 3 per cent., according to the testimony of Johnston, the
company's local agent at Springfield, through whom the loan was made, was
'discounted' at the time the loan was finally negotiated. The amount received by
Fowler in cash from the company was $7,809.69. It was paid by a draft of
Johnston on the company in favor of Fowler of date February 23, 1874.

In addition to the interest exacted for the loan, Fowler paid Johnston, as his
commissions, the sum of $100. In reference to these commissions, and the
relations held by him with the trust company, Johnston testified: 'I had an
agreement with the defendant that upon the completion of this loan he was to
pay me a commission of one hundred dollars. After the loan was completed,
and after the draft exhibited had been delivered to the defendant, he paid me
this one hundred dollars. The draft for $7,809.69, exhibited herein, was for the
full value of this $9,000 loan on the day it was negotiated and closed, as before
stated and shown; and no deduction from said full value of this loan on that day
was made by me on account of my said commission, or on any other account
whatever. The agreement under which this commission was paid me by the
defendant was unknown to the complainant, and no part of said $100 belonged
to or was paid to the complainant. The expense of the abstract of title furnished
by the defendant, and the acknowledging and recording of the trust-deed, was,
of course, paid by the defendant, but no deduction on account therefor was
made from the present value of this loan on the day named. * * * In the
negotiation of this loan, from its inception to its completion, I acted as the
medium of communication between the complainant and the defendant. I was
not authorizedneither did I attemptto accept or reject the defendant's

application for this loan. I did, however, recommend its acceptance by the
complainant. Nor did I pass on the question of title to the real estate, all these
matters having been submitted to and decided by the complainant in New York;
nor for what I did in connection with this loan was I paid by the complainant
anything, nor was I authorized by the complainant to do anything in connection
with this loan more than I did, and as I have shown.'
10

On cross-examination Johnston said: 'This was the first loan I made for
complainant. Afterwards I made other loans, not only to these parties, but to
others. I had an understanding with the complainant company a short time
before this loan was made. This loan and all other loans I made were in
pursuance of this understanding. The complainant furnished me with the blank
'Exhibit F' [the application for the loan] in this case, and blank 'Exhibit D,' [the
report of the loan as negotiated with the borrower,] and gave me instructions as
to how they should be filled up, which I accordingly followed in filling up such
blanks. When I procured an application in this way I forwarded the same to the
company for their consideration, acceptance, or rejection. In my indorsement on
this application recommending the loan, in signing my name as agent, I
understood myself as agent of the company in this matter. Complainant acted
through me in making this loan. In my arrangement with complainant for
making these loans it was the understanding that complainant was to pay me
nothing whatever for my services, and that I was to procure whatever pay I had
from the borrower.'

11

In reference to Johnston's agency for the trust company it further appears that
before this loan was made, one Rockwell, an officer or agent of the trust
company, went to Springfield, Ill., to get some one to act as its agent at that
place. He asked Fowler to suggest some one to loan money for the company on
real estate. Fowler recommended Johnston; who, upon being introduced to
Rock well by Fowler, was appointed. To the written application for the loan the
following was appended: 'I have examined the within application, believe the
statements to be correct, and recommend a loan to applicant of $10,000 on the
security offered. R. P. JOHNSTON, Agent.'

12

The bonds having been executed by Fowler, they were transmitted by Johnston
to the company, at their New York office, in a communication headed, 'Agency
of Equitable Trust Company, Springfield, Ills., Feb. 23, 1874,' and signed by
him as 'Agent.'

13

It is to be observed that out of the principal sum loaned the trust company
retained, by way of discount, what was claimed to be the present value of such
amount as would pay, in advance, 3 per cent. of the stipulated interest for the

whole period of the loan, five years. In view of this feature in the case, there
was much discussion at the bar as to whether it was permissible in Illinois for
the lender to exact and receive interest in advence upon a loan made at the
highest rate allowed by its laws. In view of numerous decisions of the supreme
court of that state, it is not necessary to examine this question upon principle,
for it is the settled doctrine of that court that the mere taking of interest in
advance does not bring a loan within the prohibition of usury. In Goodrich v.
Reynolds, 31 Ill. 490, 498, it was said: 'The remaining plea sets up usury in
this: that the interest was made payable semi-annually. It has long been settled
such reservation is not usurious. The whole interest may be lawfully reserved in
advance.' McGill v. Ware, 4 Scam. 21, 28; Mitchell v. Lyman, 77 Ill. 525, 529,
530; Brown v. Mortgage Co., 110 Ill. 235, 239; Hoyt v. Institution, Id. 390,
394; Telford v Garrels, 132 Ill. 550, 554, 24 N. E. Rep. 573.
14

Whether that doctrine would apply where the loan was for such period that the
exaction by the lender of interest in advance would, at the outset, absorb so
much of the principal as to leave the borrower very little of the amount agreed
to be loaned to him, we need not say. The present case does not require any
expression of opinion upon such a point, for the interest reserved in advance on
the loan to Fowler was only 3 per cent. out of 10 per cent.; and a reservation to
that extent, it would seem, is protected by the decisions of the state court. The
defense of usury, so far as it rests upon the fact that 3 per cent. of the stipulated
interest was take in advance by the lender, must, therefore, be overruled.

15

But, in view of other decisions of the supreme court of Illinois, must not that
defense be sustained in respect to this loan upon the ground that the borrower
was in effect required, as a condition of the loan, and in addition to the highest
legal rate of interest, to pay $100, under the guise of commissions, to the
lender's agent for procuring the loan? It is not the case simply of a borrower
employing a broker,who has no regular or established connection with the
lender as agent, and no arrangement with the lender in respect to compensation
for his services,to effect a loan, and agreeing to pay him commissions. With
agreements of the latter kind the courts have no concern, and they are not
permitted to affect the rights of the lender where he does nothing more than
lend his money at such rate of interest as the statute permits. Such is the rule in
Illinois. Hoyt v. Institution, 110 Ill. 390, 394; Telford v. Garrels, 132 Ill. 550,
554, 24 N. E. Rep. 573; Sanford v. Kane, 133 Ill. 199, 205, 24 N. E. Rep. 414.

16

These authorities, however, have no application to the case before us. The trust
company established an agency at Springfield, Ill., for the purpose of securing
loans upon real estate, and to that end constituted Johnston its agent. It made
him a medium of communication between it and those in that locality who

might wish to borrow money. It supplied him with the necessary blank forms,
and expected him to make a report as to the sufficiency of the security offered.
Of course it knew that no one would regularly perform the duties of such a
position without reasonable compensation. That the agent might receive such
compensation, the company came to an understanding with him at the outset
that he must make the borrower pay for his services. With such an arrangement
between it and its agent, the company need not be informed in any particular
case of the amount the latter would exact from the borrower as compensation
for effecting a loan; but it must be held to have known that the agent would not
devote his energies and time to its business gratuitously, and would not forward
to it an application for a loan, unless the borrower agreed to compensate him
for his services. The services performed by Johnston, as its regular local agent,
charged with the duty of receiving and forwarding applications for loans, with
his opinion as to the sufficiency of the security offered, were of substantial
value to the company, as much so as if they had been performed under an
arrangement that the company should, out of the money loaned, retain for him
the amount which, by previous agreement with the borrower, he was to receive
as his compensation. And the services performed by him were just what they
would have been had he accepted the agency under such a specific arrangement
as that just suggested.
17

Under all the circumstances, was not this transaction tainted with usury?
Should not the $100 paid to the company's agent be regarded as part of the
amount which Fowler was required to pay for the use of the money borrowed?
These questions are answered by the supreme court of Illinois. In Payne v.
Newcomb, 100 Ill. 611, 616, the inquiry was whether the commissions paid by
the borrower to the person through whom a loan, at the highest legal rate, was
effected, were to be taken into account in determining whether the transaction
was usurious. That case is so directly in point that we feel justified in making
extracts from the opinion of the court. It was said: 'Did Stevens [the lender]
know that Newcomb [the broker] was charging for his services, and collecting
it from the borrower? Newcomb says that it was the understanding he was to
get it of the borrower, and that establishes the fact beyond all cavil. Were these
payments of commissions of benefit or profit to Stevens? They unquestionably
were, as they paid his agent for long-continued and valuable services rendered
by Newcomb for him. No one will believe that Newcomb thus incurred liability
to Stevens, and rendered skillful and valuable services for him for more than
twenty years, as a mere gratuity. It was not so understood. Newcomb says he
was to get his pay from the borrower. Stevens then paid what he owed to
Newcomb by requiring the agent to impose it on the persons to whom loans
were made. The arrangement amounted to no more or less than requiring the
agent to loan for a per cent. sufficiently high to yield Stevens the highest rate of

interest allowed by the law, and to pay the agent for his responsibility, labor,
skill, and trouble. In effect, the transaction is the same as had the loan been
made at fifteen per cent., and ten had been paid to Stevens and five to
Newcomb. This was the result which was by the parties intended before the
inception of the transaction. It was in pursuance of an arrangement of the lender
and his agent. * * * It is, however, claimed that Stevens is not liable for what
Newcomb retained and charged for what is called 'commissions;' that he had
the right to charge any sum be chose, and that would not render the loan
usurious. Had Stevens not known that Newcomb was making such charges, it
may be that he would not have been affected by them; but here it was agreed
between Stevens and Newcomb that the latter should charge a commission of
the borrower to pay him for his services. Stevens obtained the services of
Newcomb. They were of value to him, and no one will pretend that Newcomb
rendered them as a gratuity. They were rendered for Stevens, and they were
paid for by him by indirectly charging the amount to and requiring the
borrower to pay it, and this, too, by the express authority of Stevens. Had he
directed Newcomb to loan at fifteen per cent. for the first year, and ten per
cent. for each succeeding year, and to retain five per cent. on the loan for the
first year, and two and a half per cent. for renewals and extensions, and to
retain the extra per cent. above ten per cent. as compensation for his services,
would any one say that was not usury? And in what does the transaction differ
by the form given it by the agreement of the parties? In each case Stevens
would get Newcomb's services, and compel the borrower to pay for them.' And
the court adds: 'There is no more familiar rule in the law than that the usury
laws cannot be evaded by mere pretenses, shifts, or evasions. This rule runs
through all of the books, and requires the citation of no authority in its support.
The policy of the statute is to protect the weak and necessitous from the
oppression of the strong, and to sanction such transactions as this would be to
defeat that policy. Courts have no right to judge of the policy, but must enforce
the law as they find it. Whenever deemed proper, the general assembly will
change the policy by modifying or repealing the statute, but, until so modified
or repealed, we have no power to alter or change its provisions.'
18

In the previous case of Peddicord v. Connard, 85 Ill. 102, 103, the court said: 'It
is first urged that, although there may have been a greater rate of interest
retained than is permitted by the law, still, it was not usury, unless it was
agreed and so understood when the transaction occurred, and that there was no
such understanding or agreement in this case. Such seems to be the ruling of the
courts in Great Brittain and the various statutes of the Union, in which the
entire debt is forfeited or heavy penalties are imposed when the transaction is
tainted with usury. The law does not favor forfeitures, and in such cases the
courts hold to a rigid and strict compliance with the law imposing the penalty.

It is therefore probable that those courts would not give so strict a construction
if the only loss were, as it is with us, the interest on the debt for the money
loaned or forborne. Reason does not require it, as it does where the debt and
interest are lost by reason of taking or contracting for a trifle more than is
sanctioned by the law. Hence we are not prepared to adopt so rigid a
construction. If an usurious contract is made, whether express or implied, at the
time of or subsequent to the entering into the agreement, to take or reserve more
than lawful interest, it is such an agreement as is within the purview of the
statute.' And in a subsequent case: 'The statute cannot be avoided by any shift
or device which may be resorted to by the parties. The form of the transaction
is not material; but whenever it clearly appears that more than the legal rate of
interest has been exacted, the contract will be held to be usurious.' Leonard v.
Patton, 106 Ill. 99, 104.
19

We do not find that the principles announced in Payne v. Newcomb have been
overruled or modified by the state court. On the contrary, that case has been
frequently referred to, and its doctrines recognized. In Hoyt v. Institution, 110
Ill. 390, 394, it appears that Taylor, a loanbroker of Chicago, sent to the
Pawtucket Institution for Savings, in Rhode Island, an application by Hoyt for a
loan, which was accepted. The lender retained $250 out of the $5,000 loaned, to
pay a half year's interest in advance. The broker charged the borrower $250 as
his commission, and the latter received only $4,500. The court said: 'This
commission received by Taylor was not from any arrangement with the
institution for savings, or with its knowledge. It got no part of the commission,
and received no more than ten per cent. interest on the money loaned. Brokers
negotiating loans of other people's money may charge the borrower
commissions, without thereby making a loan at the full rate of legal interest
usurious. Ballinger v. Bourland, 87 Ill. 513; Phillips v. Roberts, 90 Ill. 492;
Boylston v. Bain, Id. 283. Payne v. Newcomb, 100 Ill. 611, was not intended to
decide anything to the contrary, as seems to be supposed by counsel for
plaintiffs in error. In the latter case there was an express understanding between
Stevens, the lender, and Newcomb, his agent, that Newcomb should get his
commissions from the borrower.' In Cox v. Insurance Co., 113 Ill. 382, 385, the
court, after observing that the fact that an agent, without the authority, consent,
or knowledge of his principal, upon loaning the money of the latter, exacts
from the borrower a sum in excess of lawful interest, does not make the loan
usurious, said of Payne v. Newcomb, 100 Ill. 611, that it was 'quite another
case than the one before us, and does not apply to the facts of the present case.
There services were rendered by the loan agent for the lender of the money,
and the commission paid by the borrower to the agent was paid under a
prearrangement made between the lender and the agent that the latter should
get his compensation for the services rendered by him to the lender by charging

commissions to the borrower.' See, also, Ballinger v. Bourland, 87 Ill. 513,

516; Kihlholz v. Wolf, 103 Ill. 362, 366; Meers v. Stevens, 106 Ill. 549, 552;
Ammondson v. Ryan, 111 Ill. 506, 510; Insurance Co. v. Boggs, 121 Ill. 119,
127, 13 N. E. Rep. 550.
20

This case cannot be distinguished from Payne v. Newcomb. In view of the

decisions of the supreme court of Illinois, and the manifest policy of the law of
that state relating to usury, we cannot adjudge that a loan, under a fixed
arrangement between the lender and an individual that the latter will act as the
agent of the former at a particular place, and obtain compensation for his
services by way of commissions exacted from the borrower, is to be governed
by the same principles that apply in the case of one holding no relations of
agency with the lender, but is a mere broker, who gets his commissions from
the borrower, without the knowledge, authority, or assent of the lender. It is not
consistent with the law of Illinois, as declared by its highest court, that the
lender, when taking the highest rate of interest, shall impose upon borrowers
the expense of maintaining agencies in different parts of the state through
which loans may be obtained. We therefore hold that the exaction by the trust
company's agent, pursuant to his general arrangement with it, of commissions
over and above the 10 per cent. interest stipulated to be paid by the borrower,
rendered this loan usurious.

21

The result is that the recovery must be limited to the principal sum due the
company. The statute declares, in respect to an usurious contract, that the lender
shall only recover the principal sum due; in other words, that judgment shall be
rendered only for that sum.

22

But what are the rules for the guidance of the court in determining the principal
sum due? In Illinois it is settled that a party making application to a court of
equity for affirmative relief against an usurious contract is entitled to such relief
only upon the condition that he shall pay, or offer to pay, the principal sum,
with legal interest. Clark v. Finlon, 90 Ill. 245, 248; Sanner v. Smith, 89 Ill.
123, 125; Carter v. Moses, 39 Ill. 539, 542; Henderson v. Bellew, 45 Ill. 322,
324; and Tooke v. Newman, 75 Ill. 215, 217. It is equally well settled there that
one who has voluntarily paid usurious interest cannot recover it back in an
action at law. Riddle v. Rosenfeld, 103 Ill. 600, 603; Hadden v. Innes, 24 Ill.
381, 384; Town v. Wood, 37 Ill. 512, 516; Carter v. Moses, 39 Ill. 539, 542;
Tompkins v. Hill, 28 Ill. 519. But it is the established doctrine of the supreme
court of that state that these rules have no application where the transaction has
not been settled, and the lender sues to recover a balance due on the principal
sum. In such a case the borrower, being sued, may have all payments made by
him on account of interest applied in diminution of such part of the principal as

remains unpaid. Harris v. Bressler, 119 Ill. 467, 472, 10 N. E. Rep. 188; Payne
v. Newcomb, 100 Ill. 611, 623; Hamill v. Mason, 51 Ill. 489; Heffner v.
Vandolah, 62 Ill. 483, 486; Saylor v. Daniels, 37 Ill. 331; Mitchell v. Lyman, 77
Ill. 525. Such is the uniform construction of the statute, which, in the case of
usury in a loan, forfeits the whole of the interest contracted to be received, and
permits a recovery only for the principal sum due. As there is no interest really
due if the transaction be usurious,the right to recover interest being forfeited
at the moment the contract of loan is consummated,whatever the borrower
pays on account of the loan must go as credit on the principal sum; otherwise,
the usurer would get the benefit of his illegal contract, and the statute be
rendered inoperative.
23

The court below proceeded upon the ground that the trust company was entitled
to a judgment for the amount actually received by Fowler in cash, with interest
at 6 per cent. from the date of the decree, and no credit was given on the
principal sum for numerous payments made by the borrower on account of
interest. Under the settled course of decisions in the supreme court of Illinois,
this decree must be held erroneous. Fowler paid off all the interest represented
by the coupons, and made payments after the debt became due; and, as the
company retained out of the $9,000 an amount equal to the present value of 3
per cent. of the 10 per cent. stipulated to be paid, Fowler must be regarded as
having paid that amount on the principal debt. Within the meaning of the
statute, the amount due the company at the date of the decree below was (1)
the principal sum, $9,000, diminished by all payments made by Fowler at any
time on account of the debt; (2) the sums paid by the company for insurance,
taxes, and assessments, with interest at 10 per cent. on each from date of
payment until the rendition of the decree, that being the rate fixed in the deed
of trust in respect of sums paid by the mortgagee for insurance, taxes, and
assessments on the property which the mortgagors should have paid. The
decree should have been only for the aggregate amount due on these two
accounts, ascertained in the mode just indicated, with interest from its rendition
at 6 per cent. per annum, the rate allowed on judgments by the statute of
Illinois.

24

The trust company insists that the decree should have made to it an allowance
for solicitor's fees. There is no foundation for this claim. The trust-deed
provides that in the case of a sale by the trustee at public auction upon
advertisement, all costs, charges, and expenses of such advertisement, sale, and
conveyance, including commissions, such as were at the time of sale allowed
by the laws of Illinois to sheriffs on sale of real estate on execution, should be
paid out of the proceeds. This provision does not impose upon the borrower the
burden of paying to the lender a solicitor's fee where a suit is brought for

foreclosure. The commissions referred to in the deed are allowed only where
the property is sold upon advertisement, by the trustee, without suit. The trustdeed made no provision for a solicitor's fee to the company in the event suit
was brought. That a suit became necessary because of the refusal of the trustee
to act is no reason for taxing such a fee against the mortgagor.
25

The decree is reversed, and the cause remanded, with directions to modify the
decree in accordance with the principles of this opinion.